Sarasvathy on Effectuation in HBR

A concise summary of the “effectuation” approach to entrepreneurship by its creator and champion, Saras Sarasvathy (our 2009 Hibbs Distinguished Lecturer), in the Harvard Business Review. Building on her mentor Herbert Simon, Saras characterizes effectual thinking as a mode of cognition involving experimentation, feedback, and incremental learning — in contrast to the Kirznerian notion that entrepreneurial opportunities are discovered, evaluated, and exploited in single flash of insight, or the mainstream entrepreneurship literature’s idea that entrepreneurs perceive an opportunity, then immediately assemble the resources necessary to exploit it. Saras compares the effectual method to the scientific method:

The idea that anybody can be taught to figure things out, that there is a logic to discovery and invention, would have struck our ancestors as radical and strange. Until quite recently — until science education became institutionalized and widespread — the creation of new knowledge depended on either genius or luck.

I believe we are in a similar situation now with regard to entrepreneurship. . . . The idea that anyone can be taught to be an entrepreneur, to effect things for themselves, might seem ridiculous. But consider this. Every large corporation that exists today began as a small, entrepreneurial company started by ordinary people. In retrospect, their achievements seem incredible, almost magical, by no means ordinary or learnable by ordinary people. We do not think of entrepreneurial action as a skill, one as teachable in schools as scientific reasoning. I believe it is time to change this picture.

Quite right, and I didn’t mean to suggest that Saras claims to incorporate the totality of Simon’s thought! And while my own perspective on entrepreneurship is somewhat different, I appreciate her attempt to incorporate cognitive and behavioral issues into entrepreneurship studies,

As you know I’m wrapping up the final draft of my 54-page paper on Simon’s life and work – due out this year, whooppee – and, as the Khurana & Spender JMS 2012 paper also suggests, would consider Sarasvarthy (as a Kirznerian) and Simon, as a post-positivist philosopher of administration, some distance apart. I’m anxiously waiting the arrival of Foss & Klein 2012 and am hoping that will give me a solid fix on your thinking on these matters, so I’ll keep my powder dry until then.